Hidden Forces

In this Market Forces segment, Demetri Kofinas speaks with Emerging Markets Analyst Rachel Ziemba. The conversation begins with a look towards North Korea and the geopolitical crisis unfolding there. The conversation then shifts to the falling dollar and the forward volatility of the carry-trade. They end their discussion with energy markets, specifically the chronically low price of oil and its effects on Saudi Arabia, with its dwindling foreign exchange reserves and fragile geopolitical position.

In Episode 19 of Hidden Forces, host Demetri Kofinas speaks with theoretical physicist Geoffrey West about his work studying biological systems, infrastructure, and the socioeconomics of cities. Dr. West's primary interests have been in fundamental questions in physics, especially those concerning the elementary particles, their interactions, and cosmological implications. Geoffrey West currently serves as distinguished professor at the Santa Fe Institute, where he served as President from July 2005 through July 2009. Prior to joining SFI Dr. West was the leader, and founder, of the high energy physics group at Los Alamos National Laboratory. He is also the author of SCALE, a remarkable, and timely book, whose substance and theory we explore today.

In today's conversation, we explore some of the most remarkable insights coming out of the field of computational biology. This is an interdisciplinary cohort consisting of theoretical physicists, biologists, and mathematicians who are all working together to create models that explain the origins, requirements, and limits of life. What do our models tell us about nature's design for humanity? Are there limits to growth? What accounts for the decrease in metabolic rate as size/mass increases? How do physical systems and networks scale in size within the confines of the Earth's physical space? What are the universal costs associated with our cities and our lifestyles? What accounts for their resilience? What is the significance of our thirst for more power as defined by the amount of work we do over time? What can interest rates and human time preferences tell us about our relationship to nature? What role do we play in the universe's inexorable procession towards entropy? How much time do we have left?

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

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In this Crypto Forces segment of Hidden Forces, Demetri Kofinas speaks with Gil Luria. Gil is the director of institutional equity research at D.A. Davidson and one of the earliest sell-side analysts to cover Bitcoin. Gil Luria provides us with the Wall Street perspective on Bitcoin. This conversation is also a great complement to our recent crypto forces segment with Andrew Keys.

We cover the recent run-up in the price of bitcoin, the economics of bitcoin, and the role that governments and regulators will play in this emerging market. How can we use information about supply dynamics and business cycles in mining to help us determine the fair market value of a given cryptocurrency? What does a business cycle for bitcoin mining look like? How do miners invest in new equipment, and how can overinvestment in mining rigs impact future prices?

Producer & Host: Demetri Kofinas

Editor: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

In Episode 18 of Hidden Forces, host Demetri Kofinas speaks with Samuel Bowles, about economic man and the moral economy, exploring some of the latest insights from the field of behavioral economics with insights about how incentives and prices convey information and shape perceptions of value in the economy. Dr. Bowles is a Research Professor at the Santa Fe Institute, where he heads the Behavioral Sciences Program. His studies on cultural and genetic evolution have challenged the conventional economic assumptions of an economic man motivated entirely by self-interest. The author of nearly twenty books, Samuel Bowles has most recently written The Moral Economy: Why Good Incentives Are No Substitute for Good Citizensand A Cooperative Species: Human Reciprocity and Its Evolution.

In today's conversation, we follow the archeological record of economic man. We pursue the path towards rational expectations and utility maximization. We take the road from Aristotle, paying heed to his ethics, and to his conviction that the test of a good constitution, is a good citizenry. But, with the collapse of Rome and Europe's descent into darkness emerge ideas of life as brutish and man, as wicked. Thomas Hobbes' Leviathan and Niccolò Machiavelli's Prince, were written to appeal to the lowest, most unimpressive motives of man's animal nature. Later, political economists like Bernard Mandeville and Adam Smith would take this notion further. They sought to harness the industries of avarice, converting man's self-interest towards the public good. The invisible hand emerged, and with it, notions of separability. Homo Sapiens existed in one realm, and economic man in another. The beneficent, moral being on the one hand, and the selfish, utility maximizing agent on the other. Laws were built upon this framework. Ideas of the marketplace were developed. Incentives and regulations were crafted, in what economists call Mechanism Design. What have we learned in the years since that have challenged the foundations of these neoclassical assumptions? What has come of rational expectations and utility maximization? What are some of the insights of behavioral economists, moral philosophers, and evolutionary psychologists that task the fitness of economic man? What types of systems can we design that are better suited towards the citizens of Aristotle's legislator than to the aberrations of modern economic man?

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

In Episode 17 of Hidden Forces, host Demetri Kofinas speaks with Robert Johnson, about the political economy, inequality, and the failings of our technocratic institutions. Dr. Johnson serves as President of the Institute for New Economic Thinking and is a Senior Fellow and Director of the Global Finance Project for the Franklin and Eleanor Roosevelt Institute in New York. Robert Johnson served for many years as a Managing Director for George Soros at Soros Fund Management and was part of the famous team of speculators that broke the bank of England in 1992, forcing the pound out of ERM. He served as Chief Economist of the US Senate Banking Committee under the leadership of Chairman William Proxmire, and before this, as Senior Economist of the US Senate Budget Committee under the leadership of Chairman Pete Domenici.

Black Wednesday was almost 25 years ago to the day. How has global finance, international trade, foreign exchange, and financial deregulation changed the landscape of speculation in the years since? How has a decline in productivity, a collapse in marginal costs, a rise in total debt, along with an aging demographic laid the groundwork for a rise in populism? What is the role of experts, and how has faith in technocrats and academics declined in recent years? How do we defend our liberal, democratic institutions absent convincing academics, trustworthy politicians, and inspirational leaders? How do we get the money out of politics when politics is so beholden to money? How do we reform a corrupt government that is in bed with Wall Street – a government that is beholden to multinational corporations and co-mingled with industrial military companies whose very profitability is dependent on multi-billion dollar federal contracts? It is time for us to become educated on how our political economy works, because if we don't have the knowledge to call out "the experts," then we are powerless to affect the very changes that we seek to induce.

Producer & Host: Demetri Kofinas

Editor: Stylianos Nicolaou

Engineer: Ignacio Lecumberi

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In this Market Forces segment of Hidden Forces, host Demetri Kofinas covers all things blockchain related with Andrew Keys of Ethereum's Consensus Systems. Andrew's role at consensus is to help cultivate an ecosystem of distributed application development – everything from payment processing, contract transfers, distributed computing, and even the future of the internet as we know it. Building on the innovation, adoption, and possibilities of Bitcoin, Andrew Keys has immersed himself over the last several years in what many people are calling Bitcoin 2.0 – otherwise known as Ethereum – and has become one of the world's go-to business ambassadors for blockchain technology and the Ethereum protocol. 

In today's conversation, we explore the explosive growth of the cryptocurrency industry – where it's been, what it looks like today and its potential to shape our collective future. "This is ultimately about the move away from a centralized system for organizing society towards a decentralized one that is more appropriate for the technological present," says Demetri Kofinas. Indeed, the question of centralization versus decentralization is central to the framework of blockchain technology. For all of recorded history, human beings have achieved scale through a bureaucracy. Empires, nation states, and corporations are all built upon layers of authority and thickets of bureaucracy. Blockchain manages to overcome this by shifting the burden of validation from the center to the periphery. In other words, no central authority is required in order to approve any transaction or mediate any dispute among users of the blockchain protocol. There is no need for third-party verification (TPV).

If you have been looking for a great resource for learning more about Ethereum or the blockchain, then you have come to the right place. One of Andrew Keys' main tasks as head of Global Business Development for Consensus Systems is to help educate potential users of this technology on how it all works. You won't be disappointed.

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

In Episode 16 of Hidden Forces, host Demetri Kofinas speaks with Anne Stevenson-Yang. Anne is the co-founder of J Capital Research, which conducts ground-up, primary research for institutional money managers on stocks, the Chinese economy, and the Chinese financial system. She is also the author of the recent book China Alone: China's Emergence and Potential Return to Isolation, in which she sets out her views on the Chinese economy and political system, arguing that China historically repeats a cycle of expansion and retreat.

In today's conversation, we take a trip around the world to the land of China. Our conversation concerns itself with the contemporary changes in Chinese society that came after the death of Chairman Mao. What was life like in China before Nixon and Kissinger made their famous visit in 1971? Why did modernization and reform in China begin after 1978? Who was responsible for the opening in China? What was the role of Deng Xiaoping, and why is he remembered as "the architect" of a new brand of thinking that combined socialist ideology with pragmatic aspects of market economics - a system the Chinese call "Socialism with Chinese Characteristics?"

What changes did the Chinese experience between 1979 and 1989, during the implementation of the economic reforms of Deng Xiaoping? How did these reforms culminate into the protests in Tiananmen Square in 1989? What was the Chinese government's reaction to the uprisings? The Chinese response differed significantly from the Soviet reaction to the fall of the Berlin Wall in the same year. The Chinese government decided to follow a different path after the massacres in Tiananmen Square, by turbocharging economic development. Explicit targets were set for GDP growth. There was selective liberalization of the Chinese economy, particularly in Chinese real estate. China placed a huge emphasis on building its manufacturing industries and on acquiring hard currency through exports. The Chinese financial system remained highly centralized and China's currency, the renminbi, carefully controlled. All this was used towards re-investment with an almost single-minded commitment to hitting the government's GDP targets.

Some have called the rise of China in the late 20th century a miracle. It is more appropriate to call it "the Chinese miracle." The size of the Chinese economy has increased more than 25-fold in the last 25 years. Thirty years ago, the Chinese economy measured in at less than 5% of US GDP in exchange terms (perhaps as low as 2%). By 1992, the Chinese economy was only 6% of US GDP. By 2000 China weighed in at roughly 12-15% of US GDP. Today, China boasts a Gross Domestic Product that is roughly 60% that of United States. Loan Growth in the Chinese financial system has averaged 16 percent in the last 20 years. Loan growth in China reached an all-time high of 35% percent of GDP in June of 2009, amidst the greatest economic contraction since the Great Depression. Total debt in China recently surpassed 300% of GDP. This makes the finances of Western nations like the United States, France, and the United Kingdom seem frugal by comparison. In the first 7 years since the financial crisis, bank liabilities in the Chinese financial system grew by nearly $15 trillion dollars. This is the near equivalent of the consolidated size of all US commercial banks. China has used more cement in 3 years of massive overbuilding than the U.S. employed in all of the 20th Century. Hundreds of thousands of meters of unsold residential real estate sit empty around the country. There is a massive amount of industrial overcapacity in China. Chinese ghost cities have become almost as cliche as the fake Paris', Venice, and Dubai's created within mainland China. The Chinese economy is in terrible need of a recession. But the Chinese government cannot afford the recession that it desperately needs. Nevertheless, it cannot avoid the crisis that has been building in the Chinese financial system. How will the citizens of China, its trading partners, emerging markets and developed economies react when the reckoning finally arrives. How much longer can the Chinese government continue to postpone the inevitable?

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

In Episode 15 of Hidden Forces, host Demetri Kofinas speaks with Dr. Eric Schadt. Eric Schadt is founder and CEO of Sema4, as well as Dean of Precision Medicine at the Icahn School of Medicine at Mount Sinai. During the course of his 20-year career, Dr. Eric Schadt has built genetics and systems biology groups at Merck. He built the computational biology group at Rosetta. He has served as co-founder of Sage Bionetworks and as Chief Science Officer of Pacific Biosciences. He now serves as the founder and CEO of Sema4. He has published more than 300 peer-reviewed papers in leading scientific journals, and he has contributed to a number of discoveries relating to the genetic basis of common human diseases such as diabetes, obesity and Alzheimer's.

In today's conversation, we explore the information technology of biology – DNA – the world of genomics, where big data looms large. We begin by mapping the territory of the human genome and exploring the pathways of disease. We look to understand the ways in which complex genetic combinations express themselves as phenotypes such as height, bone structure, intelligence, and personality. How are these traits coded for? What are the instructions our body uses to repair a damaged cell? What blueprint does it consult before trying to grow new arteries? How does it know to regulate our appetite or when start us down the path of puberty? What happens when these instructions are damaged? How can the smallest difference in the order of life's code make all the difference for our success, our happiness, and even our survival?

50 years have passed, between the discovery of the double-helix and the mapping of the first human genome. What progress have we made in the 15 years since? How has our ability to sequence new genomes created a paradigm shift in medicine? What is the role of big data and artificial intelligence in finding the correlations needed in order to treat malignancies and prevent diseases? What is the promise of genomics? What are the perils of big data in medicine? What stands between us and some superhuman future?

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

In this Market Forces segment, Demetri Kofinas speaks with famed investor Marc Faber, about the growing wealth and income gap seen across the world, with particular emphasis on the United States. They examine the role that central bank policy, government bailouts, and ultra-low interest rates have played in exacerbating this trend towards inequality and financial system instability. The two also discuss the latest news out of Asia and the growing instability on the Korean peninsula.

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In this Market Forces segment of Hidden Forces, host Demetri Kofinas speaks with transportation industry veteran and analyst, Hubert Horan. Demetri and Hubert's discussion centers on the ridesharing company Uber, which has received a great deal of negative press in recent months. Stories detailing a culture of intimidation at the company continue to surface. Uber has developed a reputation for using heavy-handed tactics when dealing with the press and local governments, and the behavior of its CEO Travis Kalanick has come severely into question.

With roughly $7 billion of cash on hand, along with an untapped $2.3 billion credit facility, Uber may not have the financing available to survive more than 2 years without raising additional capital or selling part or all of its remaining assets. As Demetri Kofinas has said in a prior discussion with Evan Lorenz of Grant's Interest Rate Observer, "This could be the biggest financial blow-up in the history of private placements."

Producer & Host: Demetri Kofinas

Editor: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod